Iam new to this. Can anyone suggest what to look for in a cash flow + prop. How to work out rental yeilds? what sort of rent would you expect to be getting on a prop say $200 for it to be cash flow + ? can any body give me some simple formulas to use etc
THX
Kempsta
a simple formula is the rent over the purchase price. Say $100k house has $100 rent a week. This is 100/100 which is 1 to 1 or 5% return.
The same $100k house getting $150/wk rent is 1.5/1 or 7.5%
Again the $100k property getting $180/wk is 9% and so on. Thats as simple as I look at property. Get this and your council/water rates and any body corp fees and know your management rates and a projection of maintainance and you should be fine.
We allow $1000/property/yr for maintainance as an average. If there are lifts/pools/tenniscourts your costs double as a rule so be cautious, try to buy houses for land content and units/townhouse for cashflow a bit better and there is your start.
Good Luck
DD
PS146 Certified Financial Planner
Don’t sweat the small stuff,and it’s all small stuff!!Originally posted by kempsta:Iam new to this. Can anyone suggest what to look for in a cash flow + prop. How to work out rental yeilds? what sort of rent would you expect to be getting on a prop say $200 for it to be cash flow + ? can any body give me some simple formulas to use etc
THX
Kempsta
Try buying after the crash has finished, not when it is starting. Plenty of CF+ property on the way. Use this time to learn the in’s and out’s and when the disaster happens learn from other’s mistakes.
Property is not a one way bet.[hmm]
Torachan
Are you suggesting I wait a while b4 jumping in at this stage I am not even sure where to look!!!
Do you feel the market will continue to slow due to interest rate rises.As that is what I feel.[cap]THX
kempstaDD
Thank you that is exactly what I needed on ave what sort of yeild would you need to be cf+
[cap]
THX
kempstaKempsta,
It’s spot on. It is an excellent bet to hold off for a while yet, there will be, as said above bargains and positive CF opportunities arising. As long as you don’t just dive in like others did.
Good luck.
J.
J.
Originally posted by kempsta:
on ave what sort of yeild would you need to be cfAnything better than interest rate % will be gross cf+ but for safety you’ll want to use the following:
7.3% Interest Rate (for example)
+
1.5% Potential Interest Rate change
+
1.0% Annual maintenance
+
?.?% Property Management costs (including rates etc)
+
?.?% Margin for rental voids.I know it seems fairly conservative to be chasing >10% rental returns when many are happy with <5%, but as I don’t see further capital appreciation in property for many years to come, it would be daft for me to consider anything less.
Cheers, F.[cowboy2]
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